Atalaya Mining Regulatory News (ATYM)

FINAL RESULTS FOR 12 MONTHS ENDED 31 DECEMBER 2011

27 MARCH 2012

EMED Mining Public Limited (AIM: EMED, TSX: EMD) ("EMED Mining" or "the Company"), the Europe-based minerals development and exploration company, announces its audited results for the year ended 31 December 2011.

The full audited report (as required by Toronto Stock Exchange), including consolidated Financial Statements and the Management Discussion and Analysis relating to the Company, which appear below, are also available under the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.emed-mining.com .

Highlights for 2011

·; The Government of Andalucía made policy statements that confirm support of the Company's plans to restart the Rio Tinto Copper Mine as soon as possible, including that it wants the project triggered by Q3 2012. Supportive public statements include that it is satisfied with the Company's constructive approach to resolving outstanding issues, and with its legal, technical and economic competences. Steps taken by the Government of Andalucia since January 2011 include:

·; In January 2011, its Department of Culture and Heritage formally approved project documentation.

·; In July 2011, its Departments of Industry and Environment requested revisions to documentation, notably the environmental management plans, to incorporate an enlarged land footprint and other important requests.

·; In April and August 2011 and in February 2012, it reaffirmed the Company's control of the tailings dams.

·; In January 2012, it conditionally agreed additional project and environmental plans.

·; In January 2012, it referred the project documentsfor review by the national technical agencies.

·; An agreement was executed with project vendor MRI Investment AG (since renamed Astor Holdings)), giving EMED rights to a number of mineral concessions adjacent to the Rio Tinto Copper Mine site.

·; In Slovakia, the Company continued required permitting studies and negotiations with local parties, progressing its plans to develop the Biely Vrch gold deposit.

·; Dr. Jose Sierra Lopez, former Director for Energy in the European Commission, and Mr Robert Francis, former senior partner of Deloitte & Touche in Toronto, joined the Company as non-executive Directors.

·; In December 2011, major shareholders Resource Capital Funds ("RCF") and RMB Australia Holdings ("RMB") exercised their right to convert into ordinary shares the Convertible Loan amounts owed to them by EMED Mining.

Post Period Events, other than any forementioned

·; In March 2012, the Company entered into agreements with a cornerstone customer Yanggu Xiangguang Copper Co. Ltd ("XGC"), including XGC's provision of US$15 million for 10% fully-diluted ordinary equity in the Company and XGC undertaking to provide or arrange a US$15 million subordinated debt facility as required by the providers of senior debt finance for the restart of the Rio Tinto Copper Mine.

·; In March 2012, the Company mandated Goldman Sachs International on an exclusive basis to provide and/or arrange up to US$175 million of finance for the restart of the Rio Tinto Copper Mine.

·; In March 2012, the Andalucian election was held. All major political parties had announced policies committing to a rapid processing of the Company's applications for restarting of Rio Tinto Copper Mine.

·; Mr Jasper Bertisen, a principal with significant Company shareholder RCF Management LLC, was appointed as a non-executive director of the Company, replacing colleague Dr Ross Bhappu.

Harry Anagnostaras Adams, Managing Director of EMED Mining, commented:

"We made much progress during the period in planning the restart of the Rio Tinto Copper Mine and its associated regulatory permitting, which seems to be heading for finalisation by Q3-2012.

"The only significant hurdle remaining now appears to be accessing project lands not already owned by the EMED Mining group. We therefore collaborate intensely with the regulatory authorities and strive for the earliest qualification for one particular permit, Administrative Standing, which provides the regulatory basis to resolve these land issues.

Enquiries:

REPORT OF THE BOARD OF DIRECTORS

For the year ended 31 DECEMBER 2011

The Board of Directors presents its report for EMED Mining Public Limited ("EMED Mining" and or the "Company") and its subsidiaries ("EMED" and or the "Group") together with the consolidated financial statements of the Group for the year ended 31 December 2011.

Incorporation and Principal Activity

EMED Mining was incorporated in Cyprus on 17 September 2004 and is a limited liability company under the Companies Law of Cyprus, Cap. 113. The Company was listed on the Alternative Investment Market ("AIM") of the London Stock Exchange in May 2005 and on the Toronto Stock Exchange ("TSX") on 20 December 2010.

The principal activity of the Group is to explore for and develop natural resources, with a focus on base and precious metals in certain belts of mineralization spanning Europe, the Middle East and Central Asia.

EMED is led by international mining industry specialists with corporate headquarters in Cyprus, the site of the Group's first project. Cyprus is geographically central to the Group's areas of interest, and is a member of both the European Union and the British Commonwealth. EMED has a strong commitment to the responsible development of metal production operations in Europe, with an initial focus on copper and gold.

Review of Operations

During the past 12 months EMED has made further progress on its two major projects: the Rio Tinto Copper Mine in Spain and the Biely Vrch gold project in Slovakia.

At Rio Tinto, EMED's primary effort has been on planning and permitting the re-start of the existing copper mine and processing plant. During the year, the Government of Andalucía has made public policy statements that confirm support of the Group's plans to restart the Rio Tinto Mine as soon as possible, including that it wants the project to be triggered in Q3 2012, the same date as EMED has targeted. Supportive public statements include that it is satisfied with EMED's constructive approach to resolving outstanding issues, and with its technical and economic competences - the criteria for approval of its Administrative Standing. EMED has responded to all queries and requests from the Government regarding permitting. These responses have addressed all matters raised to date. EMED has also provided independent expert reports on sensitive areas such as the optimization of waste and tailings management and storage.

The Government has taken initial steps to demonstrate its commitment to administer permitting and access to third-party lands, whilst ensuring proper handling of third parties' rights and full regulatory compliance. An agreement was executed with project vendor MRI Investment AG ("MRI") giving EMED rights to a number of mineral concessions adjacent to the Rio Tinto Copper Mine site. As soon as the process for the granting of Administrative Standing with respect to these concessions is complete, they will provide exploration potential which will aid EMED's objective to extend the project life. Subject to EMED receiving the necessary government permits for triggering the restart by the end of 2012 along with full access to all adjacent lands now designated as part of the project, a twelve month ramp-up to first production is planned. The Group has estimated re-start costs (project repairs and improvements, bonding and working capital combined) of approximately €150 million, which will be largely fundable from bank and off-take facilities which have already been planned and announced.

On 28 December 2011 Resource Capital Funds ("RCF") and RMB Australia Holdings ("RMB") exercised their right to convert the amounts owed to them under the secured convertible loan agreement, dated 4 March 2009, into new ordinary shares at a price of 4.13 pence per share. Accordingly, the outstanding principal amount owing under the Loan Agreement of US$8.5 million, along with accrued interest of US$159,788 was repaid in full by the issue of shares.

On 6 February 2012, the Company announced that it entered (with one of its subsidiaries), into conditional agreements with cornerstone customer Yanggu Xiangguang Copper Co. Ltd ("XGC"). On 22 March 2012, after approval by shareholders on 12 March 2012, XGC provided US$15 million equity by way of a subscription for new ordinary shares in the Company at a price of 9 pence per share. In addition XGC will provide or arrange a US$15 million subordinated debt facility as required by the providers of senior debt finance (who will be providing the senior debt for the purposes of the restart of operations of the Rio Tinto Mine). The Company's subsidiary, EMED Marketing Limited ("EMED Marketing") has granted XGC off-take rights over 25% of current reported copper reserves, at market prices.

EMED Mining announced on 5 March 2012 that it has formally mandated Goldman Sachs International on an exclusive basis to provide and/or arrange up to US$175 million of finance to the Company for the restart of the Rio Tinto Copper Mine. This financing is intended to be in the form of a copper pre-sale agreement and complements the capital and copper sale arrangements with XGC.

EMED is progressing towards the development of its 100%-owned Biely Vrch gold deposit, which contains Indicated Resources of 461,000 ounces and Inferred Resources of 596,000 ounces. In parallel with progressing the required permitting studies and approvals, EMED is working towards reaching various agreements with local parties directly impacted by the development of Biely Vrch. The initial capital cost is estimated to be approximately US$64 million for a 3Mtpa heap-leach operation producing approximately 60,000 ounces of gold per annum at an estimated average cash cost of ±US$530 per ounce. The capital cost noted above is a preliminary estimate derived in 2010 which will be updated in due course.

The Company allowed its option over the Regua tungsten deposit in Portugal to lapse on 31 December 2011, as it did not meet EMED's criteria for going forward.

In Cyprus, EMED continues to assess its large geological database of historical copper mining properties. Discussions are progressing with stakeholders over the entire island in a manner appropriate to the current re-unification efforts.

Results

As at 31 December 2011, the Group had cash of €7.8 million (2010: €21.5 million) and listed shares that had a market value of €3.2 million (2010: €4.4 million). During 2011, the Group incurred a net loss of €9.7 million (2010: €10.2 million), of which exploration and care and maintenance expenses were €5.9 million (2010: €5.2 million) and administration expenses were €3.8 million (2010: €4.8 million).

EMED continues to take a conservative approach in its accounting policy towards exploration expenditure. All such expenditures are written off when incurred pending the Directors' decision to commence project development.

Development costs for the Rio Tinto Copper Mine have been capitalised.

The net loss for the year is summarised as follows:

The increase in assets during 2011 is mainly due to an increase in property, plant and equipment of €2.4 million and an increase in intangible assets of €2.7 million at the Rio Tinto Copper Mine. The increase in property, plant and equipment is mainly due to the Group capitalising staff costs, professional services and other costs necessary to renovate the mining installations and put them in place for the start up. The increase in intangible assets relates to expenses for lawyers and different consultants developing the technical evaluation of operational and environmental submissions: tailing dams, water management and rehabilitation requirements. As EMED agreed to accept a larger project footprint and the consequent restoration liabilities associated with this, there was a need to increase works and reports connected to this larger footprint. A modified environmental Final Restoration Plan was submitted in February 2012. Subsequently EMED has received responses containing requests and questions from the Departments of Innovation and Environment.

Several engineering studies are underway utilising third party consultants to fully answer these letters.

Share Capital

Details on authorized and issued share capital are disclosed in Note 18 of the consolidated financial statements. At31 December 2011, EMED Mining had a total of 856 million shares on issue (944 million shares fully-diluted).

Future Developments

The Group's key near-term priority is to safely and efficiently start copper production at the Rio Tinto Mine once EMED has completed the regulatory approval process, financed the start-up and obtained shareholder approval.

Our excellent team at the Rio Tinto Mine integrates local expertise with international experience. By working closely with the regulatory authorities, EMED plans to bring this established mine up to the high standards of a 21st century operation.

Development of our Biely Vrch gold deposit in Slovakia would also create substantial value. Our Slovakian team is advancing further studies and permitting of Biely Vrch, while continuing to test a number of prospects in a prolific district.

Board of Directors

The names and particulars of the qualifications and experience of each director are set out below. All directors held office from the start of the financial year to the date of this report, except Dr. Sierra, Mr. Francis and Mr. Bertisen who were appointed on 1 October 2011, 1 December 2011 and 8 February 2012 respectively and Dr. Bhappu who resigned on 8 February 2012. In accordance with the Company's Articles of Association, one third of the board of directors must resign each year. The Company's directors, Mr. Beevor, Mr. Mehra and Mr. Davey will resign from their current positions at the forthcoming Annual General Meeting and, being eligible, will offer themselves for re-election. The remaining directors, presently members of the Board, will continue in office.

Ronald (Ronnie) Beevor, BA (Hons)

Non-Executive Chairman, British and Australian Citizen based in Australia.

Mr. Beevor serves as the Chairman of the Board. He is Chairman of the Corporate Governance, Nominating and Compensation Committee and a member of the Audit and Financial Risk Committee.

Mr. Beevor is an investment banker with extensive involvement in the natural resources industry globally. He was Head of Investment Banking at NM Rothschild & Sons (Australia) Limited between 1997 and 2002 and is currently a Senior Advisor to Gryphon Partners Advisory. He is also a director of Ampella Mining Limited, Bannerman Resources Limited, Rey Resources Limited, Talison Lithium Limited and Unity Mining Limited. Mr. Beevor has an honours degree in Philosophy, Politics and Economics from Oxford University and qualified as a Chartered Accountant in London in 1972.

Aristidis (Harry) Anagnostaras-Adams, B. Comm., MBA 

Managing Director, Australian Citizen based in Cyprus and Spain.

Mr. Anagnostaras-Adams serves as Managing Director and Chief Executive Officer of the Company. He has served as Deputy Chairman of the Australian Gold Council, is a Fellow of the Australian Institute of Management and of the Australian Institute of Company Directors. In January 2005 he moved to Europe to establish and lead EMED Mining.

Since 2006, Mr. Anagnostaras-Adams has also served as Non-Executive Chairman of AIM-listed, KEFI. Mr. Anagnostaras-Adams has previously served as Managing Director of Gympie Gold Limited ("Gympie Gold"), Executive Director of investment company Pilatus Capital Ltd., General Manager of resources investment group Clayton Robard Limited Group, Senior Investment Manager of Citicorp Capital Investors Australia Ltd. and serves (or has served) as a non-executive Director of many other public and private companies across a range of industries.

Mr. Anagnostaras-Adams has a Bachelor of Commerce (in Systems and Finance) from the University of New South Wales, Australia. He qualified as a Chartered Accountant while working with PricewaterhouseCoopers and has a Master of Business Administration from the Australian Graduate School of Management where he was awarded the John Story Memorial Prize as outstanding graduate.

John Leach, B.A. (Economics), MBA., ACA, CA.

Finance Director, Canadian and Australian citizen based in Cyprus and Spain.

Mr. Leach has over 25 years' experience in senior financial and executive director positions within the mining industry internationally. Mr. Leach serves on the Board of KEFI Minerals Plc (since 2006) and is a former member of the boards of Resource Mining Corporation Limited (2006 to 2007) and Gympie Gold Limited (1995 to 2003).

Mr. Leach holds a Bachelor of Arts (Economics) and a Master of Business Administration and is a member of the Institute of Chartered Accountants (Australia), the Institute of Chartered Accountants in Ontario, the Canadian Institute of Chartered Accountants and is a Fellow of the Australian Institute of Directors. 

Roger Davey, ACSM, MSc., C.Eng., Eur.Ing., MIMMM.

Non-Executive Director, British citizen based in the UK.

Mr. Davey serves as a Non-Executive Director of the Company. Mr. Davey is also Chairman of the Physical Risks Committee and is a member of the Audit and Financial Risk Committee.

Mr. Davey has over thirty years experience in the mining industry. Previous employment included Assistant Director and Senior Mining Engineer at NM Rothschild & Sons; Director, Vice-President and General Manager of AngloGold's subsidiaries in Argentina; Operations Director of Greenwich Resources Plc, London; Production Manager for Blue Circle Industries in Chile; and various production roles from graduate trainee to mine manager, in Gold Fields of South Africa (1971 to 1978). Mr. Davey is a director of Orosur Mining Inc. Alexander Mining Plc, and Condor Resources Plc.

Mr. Davey is a graduate of the Camborne School of Mines, England (1970), with a Master of Science degree in Mineral Production Management from Imperial College, London University, (1979) and a Master of Science degree from Bournemouth University (1994). He is a Chartered Engineer (C.Eng.), a European Engineer (Eur. Ing.) and a Member of the Institute of Materials, Minerals and Mining (MIMMM).

Ashwath Mehra, BSc.

Non-Executive Director, British Citizen based in Switzerland.

Mr. Mehra is the Chief Executive Officer of Astor Management AG. Astor is a holding company in the natural resources sector. Mr. Mehra has worked in the minerals industry for 25 years, starting his career with Philipp Brothers (now Phibro LLC) after which he spent 10 years with Glencore International AG, where he was a senior partner and ran the Nickel and Cobalt Divisions. He has substantial experience in projects and project finance and has worked on equity and bond issues.

Mr. Mehra holds a Bachelors degree in Economics and Philosophy from the London School of Economics and Political Science.

Mr. Mehra is a director of publicly listed Northern Iron Limited (Since May 2007) and Champion Minerals (Since October 2010).

Dr. Jose Nicolas Sierra Lopez, Ph.D., D.I.C., MBA.

Non-Executive Director, Spanish Citizen based in Spain.

Dr. Sierra brings to the Company extensive experience as a mining and energy leader in the business and government sectors. His experience includes being Spain's national Director General of Mines and Construction Industries and EU Director for Fossil Fuels for the European Commission. Most recently he was Commissioner at the National Energy Commission of Spain.

Dr. Sierra holds a Ph.D. in Mining Engineering from the University of Madrid. He is an elected member of the Royal Academy of Doctors of Spain.

Robert Francis, BASc. (MechEng), CA.

Non-Executive Director, Canadian Citizen based in Canada.

Mr. Francis is a retired senior partner of the Toronto office of Deloitte & Touche LLP, having enjoyed an extensive career in public accounting in Canada, 30 years as a partner. Mr. Francis led the Deloitte & Touche Resource Sector Mining Group practice providing a complete range of service to the metals/mining sector.

Mr. Francis is a non-executive director of TSX listed Volta Resources Inc., and a director of the William Osler Health Services Foundation and was previously a director of Augen Gold Corp.

Mr. Francis holds a Bachelors degree in Mechanical Engineering and is a Chartered Accountant, member of the Institute of Chartered Accountants of Ontario and the Canadian Institute of Chartered Accountants. He is also a graduate of the Institute of Corporate Directors program.

Jasper Bertisen, MSc. Mineral Economics, MSc. Mining Engineering

Non-Executive Director, Dutch Citizen based in the US.

Mr. Bertisen is a principal with RCF Management LLC, the manager of Resource Capital Funds (together "RCF"), a group of private equity funds that invests exclusively in the mining sector. RCF is a significant shareholder in EMED Mining.

Mr. Bertisen joined RCF in 2004 and, since that time, has completed technical and commercial due diligence on a large number of mining companies with projects ranging from late stage exploration through production. Mr. Bertisen is currently also a Non-Executive Director of TSX-V listed AQM Copper Inc., another RCF investee company.

Mr. Bertisen graduated with a M.Sc. degree in Mineral Economics from the Colorado School of Mines and a M.Sc. degree in Mining Engineering from Delft University of Technology.

The interests of the Directors and their immediate families (all of which are beneficial unless otherwise stated) and of persons connected with them in Ordinary Shares as at the date of this report are as follows:

* G. Toll resigned as a director on 16 September 2010.

The Directors to whom options over Ordinary Shares have been granted and the number of Ordinary Shares subject to such Options as at the date of this report are as follows:

Options, except those noted below, expire between four and six years after grant date and are exercisable at the exercise price in whole or in part up to one third in the first year from the grant date, two thirds in the second year from the grant date and the balance thereafter.

On 11 May 2007, 2.5 million options exercisable at 15p were issued to Mr. H. Anagnostaras-Adams, Managing Director. These options vested when the Company acquired 100% ownership of the Rio Tinto Mine. The options expire 11 May 2013 and can be exercised at any time.

On 23 July 2007, 1 million options exercisable at 20p were issued to Mr. J. Leach, Finance Director. These options vested when the Company acquired 100% ownership of the Rio Tinto Mine. The options expire 23 July 2013 and can be exercised at any time.

On 23 March 2009, 2 million options were issued to Mr. H. Anagnostaras-Adams, Managing Director, 1.5 million options to Mr. J. Leach, Finance Director, 1 million to Mr. R. Beevor (Chairman) and 500,000 each to Messrs. R. Bhappu and A. Mehra, Non-Executive Directors. These options are exercisable at 4.1p at any time and expire four years after the date of issue.

On 9 June 2009, 2 million options were issued to Mr. H. Anagnostaras-Adams, Managing Director, 1.45 million to Mr. J. Leach, Finance Director, 500,000 to Mr. R. Beevor (Chairman) and 250,000 each to Messrs. R. Bhappu,and A. Mehra, Non-Executive Directors. These options are exercisable at 8p at any time and expire four years after the date of issue.

On 25 January 2010, 1.8 million options were issued to Mr. H. Anagnostaras-Adams, Managing Director, 1.2 million to Mr. J. Leach, Finance Director, 600,000 to Mr. R. Beevor (Chairman) and 367,000 each to Messrs. R. Bhappu and A. Mehra, Non-Executive Directors. These options are exercisable at 13.4p and expire four years after the date of issue.

On 22 April 2010, 500,000 options were issued to Mr. R. Davey, a Non-Executive Director. These options are exercisable at 13.4p and expire four years after the date of issue.

On 20 December 2010, 2 million options were issued to Mr. H. Anagnostaras-Adams, Managing Director, 1 million options to Mr. J. Leach, Finance Director, 800,000 to Mr. R. Beevor (Chairman) and 400,000 each to Messrs. R. Bhappu, A. Mehra and R Davey, Non-Executive Directors. These options are exercisable at 12p and expire four years after the date of issue.

In May 2011, Mr. H. Anagnostaras-Adams, Managing Director and Mr. R. Beevor (Chairman) exercised options over 4,000,000 Ordinary Shares and 1,250,000 Ordinary Shares, respectively. The options were exercised at a price of 8 pence per Ordinary Share. In July 2011, options over 200,000 Ordinary Shares belonging to Mr. J. Leach, Finance Director, expired without being exercised.

On 1 October 2011, 1 million options were issued to Dr. J. S. Lopez, a Non-Executive Director. These options are exercisable at 9p and expire five years after the date of issue.

On 1 December 2011, 1 million options were issued to Mr. R. Francis, a Non-Executive Director. These options are exercisable at 9p and expire five years after the date of issue.

On 28 December 2011, 2 million options were issued to Mr. H. Anagnostaras-Adams, Managing Director, 1 million to Mr. J. Leach, Finance Director, 800,000 to Mr. R. Beevor (Chairman) and 400,000 each to Messrs. R. Bhappu, A. Mehra and R Davey, Non-Executive Directors. These options are exercisable at 10p, expire five years after the date of issue, vest in equal instalments from the date of grant of administrative standing over the lesser of three years or the time remaining to the expiry of the option.

Directors' and Executive Officers' Emoluments

In compliance with the disclosure requirements of the listing requirements of AIM, the aggregate remuneration paid to the directors and executive officers of EMED Mining for the year ended 31 December 2011 is set out below.

Shareholders holding more than 3% of share capital

The Shareholders holding more than 3% of the share capital of the Company as at 31 December 2011 were:

Corporate Governance

The Directors comply with TSX and AIM regulations. The Board remains accountable to the Company's shareholders for good corporate governance.

Board of Directors

The Board is responsible for approving Company policy and strategy. The Board holds at least six formal meetings in each calendar year and is supplied with appropriate and timely information and the Directors are free to seek any further information they consider necessary. All Directors have access to advice from the Company Secretary and independent professionals at the Company's expense. Training is available for new Directors and other Directors as necessary. A number of the Group's key strategic and operational decisions are reserved exclusively for the decision of the Board.

The Board consists of two executive directors who hold operating positions in the Company (the Managing Director and the Finance Director) and six non-executive Directors, who bring a breadth of experience and knowledge, all of whom are independent of management and five of whom are independent of any business or other relationship which could interfere with the exercise of their independent judgment. The Board regularly reviews key business risks including the financial risks facing the Group in the operation of its business.

The Company has adopted a model code for Directors' dealings which is appropriate for a TSX and AIM listed company. The Directors intend to comply with Rules 21 and 31 of the AIM Rules relating to Directors' dealings and will take all reasonable steps to ensure compliance by the Group's applicable employees as well.

Board Committees

The Company's Audit and Financial Risk Management Committee ("AFR") comprises Mr. R. Francis (Chair), Mr. R. Beevor and Mr. R. Davey. The AFR is responsible for ensuring that appropriate financial reporting procedures are properly maintained and reported on, for meeting with the Group's auditors and reviewing their reports on the Group's financial statements and the internal controls and for reviewing key financial risks.

The Company's Corporate Governance, Nominating and Compensation Committee, comprises Mr. R. Beevor (Chair), Mr. J. Bertisen and Mr. A. Mehra. The Committee is among other things responsible for reviewing the performance of the executives, setting their remuneration, determining the payment of bonuses, considering the grant of options under any share option scheme and, in particular, the price per share and the application of performance standards which may apply to any such grant.

The Company's Physical Risk Management Committee comprises Mr. R. Davey (Chair), Mr. J. Bertisen and Mr. A. Mehra. The Physical Risks Management Committee is responsible for reviewing the compliance with regulatory and industry standards for environmental performance and occupational health and safety of personnel and the communities affected by the Company.

Directors' responsibilities for the financial statements

Cyprus company law states that the Directors are responsible for the preparation of financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of the Group and of the profit or loss of the Group for that period. In the preparation of those financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgments and estimates that are reasonable and prudent; and

• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements.

The Directors are responsible for maintaining proper accounting records, for safeguarding the assets of the Group and for taking reasonable steps for the prevention and detection of fraud and other irregularities. Legislation in Cyprus governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

Creditors' payment terms

The Company does not have a specific policy towards our suppliers and does not follow any code or standard practice. However, terms of payment with suppliers are settled when agreeing overall terms of business, and the Company seeks to abide by the terms of the contracts to which it is bound.

Political donations

No political donations were made during the 2011 financial year.

Subsequent Events

On 6 February 2012, the Company entered into conditional agreements with a cornerstone copper customer Yanggu Xiangguang Copper Co. Ltd ("XGC"). XGC agreed to provide US$15 million equity (£9,484,067) by way of a subscription for new ordinary shares in the Company at a price of 9 pence per share (105,378,159 ordinary shares) and to provide or arrange a US$15 million subordinated debt facility as required by the providers of senior debt finance (who will be providing the senior debt for the purposes of the restart of operations of the Rio Tinto Mine). On March 22, 2012, following prior approval at a meeting of shareholders, XGC provided equity capital of £9,484,067 and 105,378,159 Ordinary Shares were issued to a wholly-owned subsidiary of XGC. The Company's subsidiary, EMED Marketing Limited ("EMED Marketing") has granted XGC off-take rights over 25% of current reported copper reserves.

On 5 March 2012 the Company mandated Goldman Sachs International on an exclusive basis to provide and/or arrange up to US$175 million finance to the Company for the restart of the Rio Tinto Copper Mine. This financing is intended to be in the form of a copper pre-sale agreement.

On 12 March 2012, the Company held an extraordinary general meeting of shareholders of the Company at which shareholders approved (i) an increase to the authorized share capital of the Company to £3,500,000 comprised of 1,400,000,000 Ordinary Shares of £0.0025 each; and (ii) the issuance of the aforementioned 105,378,159 Ordinary Shares pursuant to the XGC subscription.

Auditors

The auditors, MOORE STEPHENS STYLIANOU & CO, have expressed their willingness to continue in office and a resolution approving their reappointment and giving authority to the Board of Directors to fix their remuneration will be proposed at the next Annual General Meeting.

The auditor for the purposes of Canadian securities laws, MSCM LLP, has expressed their willingness to continue in office and a resolution to ratify their appointment will be proposed at the next Annual General Meeting.

By Order of the Board

Inter Jura CY (Services) Limited,

Secretary

Nicosia, Cyprus, 22 March 2012

Independent Auditors' Report

To the Shareholders ofEMED Mining Public Limited

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of EMED Mining Public Limited, which comprise the consolidated statements of financial position as at December 31, 2011 and 2010, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of EMED Mining Public Limited as at December 31, 2011 and 2010, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

To the Members of EMED MINING PUBLIC LIMITED

Report on the consolidated financial statements 

We have audited the accompanying consolidated financial statements of EMED MINING PUBLIC LIMITED (the "Company'") and its subsidiaries (together with the Company, the "Group") on pages 16 to 51, which comprise the consolidated statement of financial position as at 31 December 2011, and the consolidated statements of comprehensive income, changes in equity and cash flows of the Group and the Company for the year then ended, and a summary of significant accounting policies and other explanatory information.

Board of Directors' responsibility for the consolidated financial statements

The Board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these consolidated and Company's separate financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated and the Company's separate financial statements give a true and fair view of the financial position of EMED Mining Public Limited and its subsidiaries as at 31 December 2011, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113.

Emphasis of Matter

We draw attention to note 2, going concern paragraph, to the financial statements where it is indicated that the financial statements have been prepared on a going concern. Our opinion is not qualified in this respect.

Report on other legal requirements

Pursuant to the requirements of the Auditors and Statutory Audits of Annual and Consolidated Accounts Law of 2009, we report the following:

·; We have obtained all the information and explanations we considered necessary for the purposes of our audit.

·; In our opinion, proper books of account have been kept by the Company.

·; The consolidated financial statements are in agreement with the books of account.

·; In our opinion and to the best of our information and according to the explanations given to us, the consolidated financial statements give the information required by the Cyprus Companies Law, Cap. 113, in the manner so required.

·; In our opinion, the information given in the report of the Board of Directors is consistent with the consolidated financial statements.

Other matter

This report, including the opinion, has been prepared for and only for the Company's members as a body in accordance with Section 34 of the Auditors and Statutory Audits of Annual and Consolidated Accounts Law of 2009 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years ended 31 December 2011 and 2010

STATEMENTS OF FINANCIAL POSITION

31 December 2011 and 2010

The accompanying notes on pages 21 to 50 form part of these consolidated financial statements.

On 22 March 2012, the Board of Directors of EMED MINING PUBLIC LIMITED authorised these consolidated financial statements for issue.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Years ended 31 December 2011 and 2010

COMPANY STATEMENTS OF CHANGES IN EQUITY

Years ended 31 December 2011 and 2010

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended 31 December 2011 and 2010

COMPANY STATEMENT OF CASH FLOWS

Years ended 31 December 2011 and 2010

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YearS ended 31 December 2011 and 2010

1. Incorporation and principal activities

Country of incorporation

EMED Mining Public Limited (the "Company") was incorporated in Cyprus on 17 September 2004 as a private company with limited liability under the Companies Law, Cap. 113 and was converted to a public limited liability company on 26 January 2005. Its registered office is at, 1 Lambousa Street, Nicosia, Cyprus. The Company was listed on AIM of the London Stock Exchange in May 2005 and on the TSX on 20 December 2010.

Principal activities

The principal activity of the Group is to explore for and develop natural resources, with a focus on base and precious metals in certain belts of mineralisation spanning Europe, the Middle East and Central Asia.

2. Accounting policies

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied throughout the period presented in these consolidated financial statements unless otherwise stated.

Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap.113. The consolidated financial statements have been prepared under the historical cost convention.

The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires management to exercise its judgment in the process of applying the Group's accounting policies. It also requires the use of assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.

Going concern

The Directors have formed a judgment at the time of approving the financial statements that there is a reasonable expectation that the Company and the Group has adequate resources to continue in operational existence for the foreseeable future.

The financial information has been prepared on the going concern basis, the validity of which depends principally on the discovery of economically viable mineral deposits, obtaining the necessary mining licences and on the availability of subsequent funding to extract the resource or alternatively on the availability of funding to extend the Group's exploration activities. The financial information does not include any adjustment that would arise from a failure to complete any of the above. Changes in future conditions could require write downs of the carrying values of property, plant and equipment, intangible assets and/or deferred tax.

Adoption of new and revised International Financial Reporting Standards (IFRSs)

During the current year the Group adopted all the new and revised International Financial Reporting Standards (IFRS) that are relevant to its operations and are effective for accounting periods beginning on 1 January 2011. This adoption did not have a material effect on the accounting policies of the Group.

At the date of approval of these financial statements the following accounting standards were issued by the International Accounting Standards Board but were not yet effective:

Adoption of new and revised International Financial Reporting Standards (continued)

(i) Standards and Interpretations adopted by the EU

(ii) Standards and Interpretations not adopted by the EU

The Board of Directors expects that the adoption of these standards or interpretations in future periods will not have a material effect on the consolidated financial statements of the Group.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities (including special purpose entities) controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The financial statements of all the Group companies are prepared using uniform accounting policies. All inter-company transactions and balances between Group companies have been eliminated during consolidation.

Business Combinations:

(i) Acquisitions

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

(ii) Goodwill

Purchased goodwill is capitalized and classified as an asset on the consolidated statement of financial position. Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised.

Goodwill is reviewed for impairment on an annual basis. Trading results of acquired subsidiary undertakings are included from the date of acquisition. Goodwill is deemed to be impaired when the present value of the future cash flows expected to be derived is lower than the carrying value. Any impairment is charged to the consolidated statement of comprehensive income immediately.

Investments in subsidiary companies

Investments in subsidiary companies are stated at cost less provision for impairment in value, which is recognised as an expense in the period in which the impairment is identified. This policy only applies to the "Company" financial statements.

Investments in associate companies

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights.

Investments in associates are initially recognized at cost and are accounted for by the equity method of accounting.

Revenue recognition

Revenues earned by the Group are recognised on the following bases:

Interest income

Interest income is recognised on a time-proportion basis using the effective interest method.

Finance costs

Interest expense and other borrowing costs are charged to the consolidated statement of comprehensive income as incurred.

Foreign currency translation 

(i) Functional and presentation currency

Items included in the Group's consolidated financial statements are measured using the currency of the primary economic environment in which the entity operates (''the functional currency''). The consolidated financial statements are presented in Euros, which is the Group's functional and presentation currency.

(ii) Foreign currency translation

Foreign currency transactions are translated into the measurement currency using the exchange rates prevailing at the date of the transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of comprehensive income.

Foreign currency translation (continued)

(iii) Foreign operations

On consolidation, the assets and liabilities of the consolidated entity's foreign operations are translated at exchange rates prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period unless exchange rates fluctuate significantly. Exchange differences arising, if any, are recognised in the foreign currency translation reserve, and recognised in profit or loss on disposal of the foreign operation.

Tax

Current tax liabilities and assets for the current and prior periods are measured at the amount expected to be paid to or recovered from the taxation authorities using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Currently enacted tax rates are used in the determination of deferred tax.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority.

Acquisitions of assets

All assets acquired, including property, plant and equipment other than goodwill and intangibles, are initially recorded at their cost of acquisition at the date of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition.

When equity instruments are issued as consideration, their market price at the date of acquisition is used as fair value, except where the notional price at which they could be placed in the market is a better indication of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity subject to the extent of proceeds received, otherwise expensed.

Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is calculated on the straight‑line method to write off the cost of each asset to their residual values over their estimated useful life. The annual depreciation rates used are as follows:

The assets residual values and useful lives are reviewed, and adjusted if appropriate. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

Expenditure for repairs and maintenance of property, plant and equipment is charged to the statement of comprehensive income of the year in which they were incurred. The cost of major renovations and other subsequent expenditures are included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.

Gains and losses on disposal of property, plant and equipment are determined by comparing proceeds with carrying amount and are included in the consolidated statement of comprehensive income.

Intangible assets

Intangible assets relate to mineral rights acquired and permits in respect of projects that are at the pre-development stage. Intangible assets acquired through a business combination or an asset acquisition are capitalised separately from goodwill if the asset is separable or arises from contractual or legal rights, and the fair value can be measured reliably on initial recognition. No depreciation charge is recognised in respect of intangible assets.

Share capital

Ordinary shares are classified as equity. The difference between the fair value of the consideration received by the Company and the nominal value of the share capital being issued is taken to the share premium account.

Exploration costs

The Company expenses exploration expenditure and care and maintenance costs as incurred.

Share‑based payments

IFRS 2 "Share‑based Payment" requires the recognition of equity‑settled share‑based payments at fair value at the date of grant and the recognition of liabilities for cash‑settled share‑based payments at the current fair value at each balance sheet date.

The fair value is measured using the Black Scholes pricing model. The inputs used in the model are based on management's best estimates for the effects of non-transferability, exercise restrictions and behavioural considerations.

Use and revision of accounting estimates

The preparation of the financial report requires the making of estimations and assumptions that affect the recognised amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Financial instruments

Financial assets and financial liabilities are recognised on the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise cash at bank and in hand.

Investments

The Group classifies its investments in equity and debt securities in the following categories: financial assets at fair value through profit or loss, held‑to‑maturity investments and available for‑sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of investments at initial recognition and re‑evaluates this designation at every reporting date.

Trade and other receivables

Trade receivables are measured on initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Impairment of trade receivables is established when there is objective evidence as a result of a loss event that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The impairment is recognised in the income statement.

Available‑for‑sale financial assets

Investments intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, are classified as available‑for‑sale; these are included in non‑current assets unless Management has the express intention of holding the investment for less than 12 months from the reporting date or unless they will need to be sold to raise operating capital, in which case they are included in current assets.

Regular way purchases and sales of investments are recognised on the trade‑date which is the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available‑for‑sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortised cost using the effective interest method.

Realised and unrealised gains and losses arising from changes in the fair value of financial assets at fair value through profit or loss are included in the consolidated statement of comprehensive income in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of available‑for‑sale financial assets are recognised in profit or loss and then in equity. When available‑for‑sale financial assets are sold or impaired, the accumulated fair value adjustments are included in the consolidated statement of comprehensive income.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same and discounted cash flow analysis, making maximum use of market inputs and relying as little as possible on entity specific inputs. Equity investments for which fair values cannot be measured reliably are recognised at cost less impairment.

The Group assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available‑for‑sale financial assets the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss is removed from equity and recognised in profit and loss. Impairment losses recognised on equity instruments are not subsequently reversed.

Borrowings

Borrowings are recorded initially at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any differences between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated statement of comprehensive income over the period of the borrowings using the effective interest method.

Trade payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

Derecognition of financial assets and liabilities

Financial assets

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:

·; the rights to receive cash flows from the asset have expired;

·; the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a 'pass through' arrangement; or

·; the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

Impairment of assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. This is not generally the case with master netting agreements, and the related assets and liabilities are presented gross in the statement of financial position.

Provisions

Provisions are recognised when the Group has a present obligation, whether legal or constructive, as a result of a past event for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the obligation at the balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability.

Comparatives

Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.

3. Financial Risk Management

Financial risk factors

The Group is exposed to interest rate risk, liquidity risk, currency risk and capital risk management arising from the financial instruments it holds. The risk management policies employed by the Group to manage these risks are discussed below:

Interest rate risk

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group has no significant interest-bearing assets. The Group is exposed to interest rate risk in relation to its non-current borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group's management monitors the interest rate fluctuations on a continuous basis and acts accordingly.

At the reporting date the interest rate profile of interest-bearing financial instruments was:

Fixed rate instruments

Sensitivity analysis

An increase of 100 basis points in interest rates at 31 December 2011 would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. For a decrease of 100 basis points there would be an equal and opposite impact on the profit and other equity.

Liquidity risk

Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially enhances profitability, but can also increase the risk of losses. The Group has procedures with the object of minimising such losses such as maintaining sufficient cash and other highly liquid current assets and by having available an adequate amount of committed credit facilities.

The following tables detail the Group's remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. A breakdown of the balances is shown in Note 20.

Currency risk

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Group's measurement currency. The Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the US Dollar, the Canadian Dollar and the British Pound. The Group's management monitors the exchange rate fluctuations on a continuous basis and acts accordingly.

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Sensitivity analysis

A 10% strengthening of the Euro against the following currencies at 31 December 2011 would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. For a 10% weakening of the Euro against the relevant currency, there would be an equal and opposite impact on profit or loss and other equity.

Capital risk management

The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance.

Critical accounting estimates and judgments

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Income taxes

Significant judgment is required in determining the provision for income taxes. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Capitalisation of exploration and evaluation costs

Under the Group's accounting policy, exploration and evaluation expenditure is not capitalised until the point is reached at which there is a high degree of confidence in the project's viability and it is considered probable that future economic benefits will flow to the Group.

Subsequent recovery of the resulting carrying value depends on successful development or sale of the undeveloped project. If a project does not prove viable, all irrecoverable costs associated with the project net of any related impairment provisions are written off.

Impairment review of asset carrying values

Events or changes in circumstances can give rise to significant impairment charges or reversals of impairment in a particular year.

Where the recoverable amounts of Group cash generating units are assessed by analyses of discounted cash flows, the resulting valuations are particularly sensitive to changes in estimates of long term commodity prices, exchange rates, operating costs, the grouping of assets within cash-generating units and discount rates.

Contingencies

Material contingencies facing the Group are set out in Note 25 of the consolidated financial statements. A contingent liability arises where:

i) a past event has taken place for which the outcome will be confirmed only by the occurrence or non-occurrence of one or more uncertain events outside of the control of the Group; or

ii) a present obligation exists but is not recognised because it is not probable that an outflow of resources will be required to settle the obligation.

A provision is made when a loss to the Group is likely to crystallise. The assessment of the existence of a contingency and its likely outcome, particularly if it is considered that a provision might be necessary, involves significant judgment taking all relevant factors into account.

Share-based compensation benefits

Share-based compensation benefits are accounted for in accordance with the fair value recognition provisions of IFRS 2 'Share-based Payment'. As such, share-based compensation expense for equity-settled share-based payments is measured at the grant date based on the fair value of the award and is recognized as an expense over the vesting period. The fair value of such share-based awards at the grant date is measured using the Black Scholes pricing model. The inputs used in the model are based on management's best estimates for the effects of non-transferability, exercise restrictions, behavioural considerations and expected volatility.

4. Business and geographical segments

Business segments

The Group has only one distinct business segment, being that of mineral exploration and development.

Geographical segments

The Group's exploration activities are located in Cyprus, Georgia, Greece, Spain and Slovakia and its administration and management is based in Cyprus.

2011